Employment Bill passes its third reading

The Government has successfully pushed through its flagship workplace relations policy. On 5 December 2018 the Employment Relations Amendment Bill (the Bill) passed its third reading, and the Bill is expected to receive Royal assent this week. The Bill has been watered down from its original version, thanks largely to NZ First’s publicised reluctance to agree to certain provisions, but the passing of the Bill is still seen as a victory for unions. Some of the provisions in the Bill will come into effect from the day after the date of Royal assent, while others will come into effect on 6 May 2019.

The amendments set out in Supplementary Order Paper 153 have been adopted in the final version of the Bill. We discussed these amendments in a recent update. These amendments were largely seen as a softening of the Bill to ensure that it would receive sufficient political support to pass. Of particular note, the final version of the Bill now retains the 90-day trial periods for employers with 19 or fewer staff and gives an employer the ability not to settle a multi-employer collective agreement if it has reasonable grounds not to.

The National Party has claimed that the Bill takes New Zealand back to the 1970s. It is probably more accurate to say that the Bill takes us back to 2008, to the Clark-led government, as most of the changes are simply rolling back amendments that National introduced during its nine years in government. However, if the Government pushes on next year with its plans to introduce Fair Pay Agreements (FPAs), we really will be taking a big step back in time. FPAs would set minimum terms and conditions (not just pay) for all workers (which could be extended to include contractors as well as employees) in an entire industry or occupation. If FPAs are set up, it could effectively be a return to the national awards system which has not been a feature of our legal landscape since they were removed by the Employment Contracts Act 1991. The Government formed a Fair Pay Agreement working group in June this year, led by former Prime Minister Jim Bolger ONZ, to make recommendations around the design of that system. We will be keeping a close eye on the working group’s report, and will provide further updates next year.

If you have any questions about how these changes will impact you or your organisation, please contact one of our experts.